Sunday, September 22, 2013

Exponential Improvement Is The New Growth

Here's a sneak peak at a future S.A.T. analogy. Fill in the blank.
Velocity : Acceleration : Jerk :: Growth : Continuous Improvement : _________
We'll get to the answer, but first a history lesson!

Buckminster liked to make up new words. "Ephemeralization" was his from the 1930's. The classic definition of ephemeralization is "doing more with less", but it's more precisely the observation that things happen more quickly and easily over time, requiring less resources. The easier things become, the faster they become easier. The cheaper things become, the faster they become cheaper. Generally this is attributed to the adoption of scientific management, as exemplified in early industrialization (especially by Henry Ford).

Gerald Hawkins in the 1980's described the idea that each stage of change had an inflection point where a paradigm shift ('mindsteps', as he called them) occurred, advancing the rate of change forward. He also observed that the rate of paradigm shifts was increasing. Change was accelerating.

In 1986, Masaaki Imai popularized "Kaizen", the idea of continuous improvement in business management. Ideally improvement doesn't need to be limited to discrete (continual)  jumps based on scheduled analysis after designated periods of time (iterations), but could instead be driven by slack in the system to allow (continuous) improvements every day. The acceleration of change requires faster measurement and analysis, but with built-in slack the workers on the factory floor can do it better than managers at a distance.

In 2010, David Anderson documented "Kanban", a method of software development that integrates Agile concepts with Japanese Kaizen improvement techniques. The practices and policies Anderson describes are great management techniques based on years of experience and an evolution of Agile methodology. His primary focus is on work in progress limits to create slack, but the real power comes from empowering workers with information and constant feedback so that they can use the slack for continuous improvement.

So with the implementation of continuous improvement in Japanese factories (like Toyota) and later Silicon Valley software developers (like Google), managers found themselves with less management to do because they'd empowered their employees to do their job for them. Many people have been confused by this, thinking that managers are now obsolete in an organization of continuous improvement (like Valve software), but the truth is simply that managers need to level up, the same way factory workers replaced by automation had to become educated to produce, maintain, and improve automation. Managers won't manage people in the future, they'll manage their own empowerment of people.

Managers don't just provide feedback any more. They empower employees to provide and receive feedback. Just like employees need feedback to improve, management needs feedback to improve as well. If you really want to get better at getting better you need to level up again. "It's much less about 'What kind of knowledge advantage do I have right now?' but 'How fast am I creating new knowledge?'."

This is where executives come in. The new job of executives isn't to manage the managers any more or even just to manage external expectations, but to empower the managers to manage themselves. Empowered managers get better at empowering workers to get better, inovating on innovation. As we've seen on the previous level, old style executives are becoming obsolete, even a liability. They need to educate themselves and raise to the challenge of faster change, to manage the empowerment of managers. They need to not just set a culture, but grow a culture of change. Business doesn't just need to evolve; it needs to improve its ability to evolve.

Back to the analogy...

Velocity is position over time. Acceleration is velocity over time. Jerk is acceleration over time. Growth is improvement of state over time (the new role of workers). Continuous Improvement is positive growth over time (the new role of managers). So Exponential Improvement is faster continuous improvement over time (the new role of executives).  Jerk is the third time-derivative of position. Exponential Change is the third time-derivative of state. Exponential Improvement is positive Exponential Change.

No, this doesn't mean future executives will all be jerks, but they might need to be good at calculus. The executive needs to enable Exponential Improvement, and the easiest way to do that is to derive it from the employee improvement metrics over time. They'll have to analyze metrics and behavior to figure out how to improve exponentially. They'll have to identify synergistic ways to empower managers that increase their rate of empowerment.

To be fair, Continuous Improvement will get you a long way. Most organizations haven't even figured out that yet, but they will. And the more that figure it out, the faster the movement will grow. But if you really want to succeed in the future you can't stop there. You have to get better at getting better at getting better.

Future Shock is no longer in the future, it's now. Change is and will be. Change is continuous and accelerating and decentralized. This isn't a revolution; revolutions end. Businesses that didn't change are already dead. Businesses that aren't changing fast enough are dying. The new race is how fast you can innovate. It's a race you can't conclusively win; you can only win now and survive until you win again. Growth is slowing down. To grow linearly you'll need to improve exponentially.

Stop watching the world improve and start participating in making it improve faster.

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